Who can claim
This deduction is available to individuals and companies.
- The expense is incurred in carrying on an existing income-producing business.
- Any private, capital or non-income-producing component is reasonably apportioned or excluded.
- The contractor service is genuinely connected with earning business income.
What you cannot claim
- Do not include private drawings or personal expenses.
- Do not treat a capital asset, improvement or acquisition cost as an ordinary operating expense.
- Capital services must be treated under the relevant capital or asset rules.
- Where no ABN is provided, withholding and reporting requirements affect deductibility.
How the amount is worked out
Claim the eligible business-service cost, subject to withholding and reporting rules where applicable.
Records the ATO expects
- Supplier invoice
- ABN check or invoice
- Contract
- Payment evidence
Where this rule comes from
Primary source: ATO deductions for payments to workers (Updated 10 June 2025). Reviewed 30 July 2026. Covers the 2025-26 and 2026-27 income years.